Bank of England

Bank of England gave no signals that will rush into raising interest rates at its meeting on Thursday, which led to a sharp drop in the exchange rate of the pound, reports Reuters. The tone of the Bank of England differs from that of the US Federal Reserve, whose Chairman Janet Yellen this week once again confirmed that it is possible rise in interest rates there start in December.
At the last meeting only one member of the Monetary Policy Committee of the Central Bank has announced to raise interest rates this month. The other eight voted to retain a record low of 0.5%, which is not changed by March 2009 more bets on markets show that investors do not expect interest rate hikes before the last few months of next year.
Lowered forecasts
The bank also lowered its forecast for economic growth in the country this year and next, citing problems in emerging markets. The institution also expects inflation to rise slowly, even if interest rates remain low throughout the following year. According to new forecasts inflation will remain below 1% until mid-2016 because of low prices of energy, food and other imported goods. Bank predicts 2.7% GDP growth this year, 2.5% in 2016 and 2.7% in 2017. This is a slight decrease compared to previous forecasts of the bank from August, but remained above the expectations of most analysts.
During Thursday's trading the British pound depreciated by more than one percent against the dollar and the euro. The main index of the London Stock Exchange FTSE slid 0.4 percent because of sales of shares of companies in the commodities sector, which suffered from the strong dollar.
European markets
Overall the European markets the trend was positive due to good financial results posted by companies such as sporting goods manufacturer Adidas and bank Societe Generale. The pan-European FTSEurofirst 300 index advanced over 0.2%, Germany's DAX index rose 0.6 percent and the French CAC 40 - 0.9 percent. So far, about 60% of the listed companies of European stock exchanges have announced their results for the past quarter. Of these, about half have reached the levels anticipated by analysts or surpass them.
Shares of European mining companies, however, fell by an average of 1.7 percent on expectations the dollar to continue to appreciate. Appreciation of the US currency makes commodities more expensive for customers operating in other currencies, which reduces demand for industrial metals.

More Reading

Related

The lack of a harmonized market is one of the main problems for banks. In recent years, the European Central Bank has done much to reassure investors in the region and to convince national governments and regulators, they should not restrict bank capital and liquidity frontiers. However, bankers point out that this behavior is firmly established at the height of the debt crisis, provides stability only partially. The lack of common rules in areas such as market access and corporate bankruptcies mean that Europe is still significantly more fragmented than the US. According to the plans of Brussels, these problems must be solved through the establishment of Union Capital Markets.